The Reserve Bank of India (‘RBI’) has imposed a penalty of Rs. 1.5 crore on Kotak Mahindra Bank Ltd.(‘Kotak’) for contravening the provisions of the Banking Regulation Act, 1949, the Depositor Education and Awareness Fund Scheme, 2014, and RBI directions.

As per the Statutory Inspection for Supervisory Evaluation(‘ISE’) conducted by RBI, Kotak failed to:

  1. Credit eligible amount to the Depositor Education and Awareness Fund within the period of 3 months.

  2. Credit (shadow reversal) the amount involved in the unauthorized electronic transactions to the customers’ account within 10 working days from the date of notification by the customer.

  3. Maintain/ apply margin on advances to stock brokers.

Kotak has been penalized for contravention of Section 26(A)(2) of the Banking Regulation Act, 1949 read with paragraph 3 of ‘The Depositor Education and Awareness Fund Scheme, 2014′ and for non-compliance with the directions on ‘Customer Protection — Limiting Liability of Customers in Unauthorized Electronic Banking Transactions’, and ‘Loans and Advances — Statutory and Other Restrictions’.

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